Transcript: Obama and Clinton Debate

GIBSON: Good evening, and welcome. And it is fitting that we come
to you tonight the National Constitutional Center, just up Independence
Mall, from the Liberty Bell and Independence Hall itself.

And we are here in Philadelphia for the Pennsylvania Democratic
debate. The contest for the Democratic presidential nomination has gone
on for some time, to say the least. This is sort of round 15 in a
scheduled 10-rounder.

This debate comes after a long pause in the primary and caucus
schedule. It's been five weeks since the last votes were cast, six
weeks since last the candidates debated. Much has happened in those six
weeks, and there is much to discuss.

Just to reintroduce and give due respect to the candidates, Senator
Hillary Clinton of New York...

(APPLAUSE)

... and Senator Barack Obama of Illinois.

(APPLAUSE)

ABC News is pleased to sponsor the debate, along with the National
Constitutional Center. And while the candidates debate on stage, a
lively debate will also be unfolding online on ABCNews.com and on Facebook.

We have time guidelines for answers tonight: 90 seconds to answer a
question; 60 seconds for rebuttal. George and I are going to be very
lenient about time, but not permissive.

I have actually two clocks in front of me tracking the total time
that a candidate has spoken as the evening goes on. And if we find one
speaking longer than the other, we will do our best to equalize time in
the later stages of the evening.

I've asked the audience not to applaud during the debate. What's
important is not the reaction of those in the Kimmel Theater, but the
reaction of voters in Pennsylvania, who go to the polls next Tuesday,
and people around the country.

So we're going to begin with opening statements. And we had a flip
of the coin, and the brief opening statement first from Senator Obama.

OBAMA: Thank you very much, Charlie and George.

And thanks to all in the audience and who are out there.

You know, Senator Clinton and I have been running for 15 months
now. We've been traveling across Pennsylvania for at least the last
five weeks.

And everywhere I go, what I've been struck by is the core decency
and generosity of the people of Pennsylvania and the American people.

But what I've also been struck by is the frustration.

I met a gentleman in Latrobe who had lost his job and was trying to
figure out how he could find the gas money to travel to find a job. And
that story, I think, is typical of what we're seeing all across the country.

People are frustrated, not only with jobs moving and incomes being
flat, health care being too expensive, but also that special interests
have come to dominate Washington, and they don't feel like they're being
listened to.

I think this election offers us an opportunity to change that, to
transform that frustration into something more hopeful, to bring about
real change.

And I'm running for president to ensure that the American people are
heard in the White House. That's my commitment, if the people of
Pennsylvania vote for me and the people of America vote for me.

GIBSON: Senator Clinton?

CLINTON: Well, we meet tonight here in Philadelphia, where our
founders determined that the promise of America would be available for
future generations, if we were willing and able to make it happen.

You know, I am here, as is Senator Obama. Neither of us were
included in those original documents. But in a very real sense, we
demonstrate that that promise of America is alive and well.

But it is at risk. There is a lot of concern across Pennsylvania
and America. People do feel as though their government is not solving
problems, that it is not standing up for them, that we've got to do more
to actually provide the good jobs that will support families; deal once
and for all with health care for every American; make our education
system the true passport to opportunity; restore our standing in the world.

I am running for president because I know we can meet the challenges
of today, that we can continue to fulfill that promise that was offered
to successive generations of Americans, starting here, so long ago.

CLINTON: And I hope that, this evening, voters in
Pennsylvania and others across the country will listen carefully to what
we have to say, will look at our records, will look at the plans we
have. And I offer those on my Web site, hillaryclinton.com, for more
detail.

Because I believe with all my heart that we, the people, can have
the kind of future that our children and grandchildren so richly deserve.

GIBSON: Thank you, both.

GIBSON: We'll begin each of the segments of this debate with short
quotes from the Constitution that are apropos to what we're going to
talk about. And it is good to be back here at the National Constitution
Center.

So let's start. And I'm going to give a general question before we
get to the issues to both of you on politics.

There have already been many votes in many states. And you have
each, as you analyze the vote, appealed disproportionately to different
constituencies in the party. And that dismays many in the party.

Governor Cuomo, on elder statesman in your party, has come forward
with a suggestion. He has said, "Look, fight it to the end. Let every
vote be counted. You can test every delegate. Go at each other right
till the end. Don't give an inch to one another. But pledge now that
whichever one of you wins this contest, you'll take the other as your
running mate, and that the other one will agree, if they lose, to take
second place on the ticket."

So I put the question to both of you: Why not?

(LAUGHTER)

Don't all speak at once.

(LAUGHTER)

OBAMA: Well, I'm happy to start with a response.
Look, this has been an extraordinary journey that both Senator
Clinton and I have been on and a number of other able candidates. And I
think very highly of Senator Clinton's record.

But as I've said before, I think it's premature at this point for us
to talk about who vice presidential candidates will be, because we're
still trying to determine who the nominee will be.

But one thing I'm absolutely certain of is that, come August, when
we're in Denver, the Democratic Party will come together, because we
have no choice if we want to deliver on the promises that not only we've
made but the Founders made.

We are seeing people's economic status slipping further and further
behind. We've seen people who have not only lost their jobs but now are
at risk of losing their homes. We have a sharp contrast in terms of
economic policies. John McCain wants to continue four more year of
George Bush policies and, on the foreign policy front, wants to continue
George Bush's foreign policy.

So I'm confident that both Senator Clinton's supporters and Senator
Obama's supporters will be supporting the Democratic nominee when we
start engaging in that general election.

GIBSON: But, Senator Clinton, Governor Cuomo made that suggestion
because he's not so sure, and other Democrats are not so sure.

Just to quote from the Constitution again, "In every case" --
Article II, Section 1 -- "after the choice of the president, the person
having the greatest number of votes of the electors shall be the vice
president."

If it was good enough in colonial times, why not in these times?

CLINTON: Well, Charlie, I'm going to do everything I possibly can
to make sure that one of us takes the oath of office next January. I
think that has to be the overriding goal, whatever we have to do.

Obviously, we are still contesting to determine who
will be the nominee. But once that is resolved, I think it is
absolutely imperative that our entire party close ranks. That we become
unified. I will do everything to make sure that the people who
supported me support our nominee. I will go anywhere in the country to
make the case.

And I know that Barack feels the same way because both of us have
spent 15 months traveling our country. I have seen the damage of the
Bush years. I've seen the extraordinary pain that people have suffered
from because of the failed policies. You know, those who have held my
hands who've lost sons or daughters in Iraq. And those who have lost
sons or daughters because they didn't have health insurance.

And so, regardless of the differences there may be between us, and
there are differences, they pale in comparison to the differences
between us and Senator McCain. So, we will certainly do whatever is
necessary to make sure that a Democrat is in the White House next January.

GIBSON: All right. I will let this go. I don't think Governor
Cuomo has any takers yet. Let me start with a question to you, Senator
Obama.

Talking to a closed-door fund-raiser in San Francisco 10 days ago,
you got talking in California about small town Pennsylvanians who have
had tough economic times in recent years. And you said they get bitter
and they cling to guns or they cling to their religion or they cling to
antipathy toward people who are not like them. You said you misspoke.
You said you mangled what it was you wanted to say. But we've talked to
a lot of voters. Do you understand that some people in this state find
that patronizing and think that you said actually what you meant?

OBAMA: Well I think there's no doubt that I can see how people were
offended. It's not the first time that I've made a statement that was
mangled up. It's not going to be the last.

But let me be very clear about what I meant because it's something
that I've said in public. It's something that I've said on television,
which is that people are going through very difficult times right now.

And we are seeing it all across the country. And that was true even
before the current economic hardships that are stemming from the housing
crisis. This is the first economic expansion that we just completed
in which ordinary people's incomes actually went down when adjusted for
inflation. At the same time, the costs of everything from health care
to gas at the pump has skyrocketed. And so the point I was making was
that when people feel like Washington's not listening to them, when
they're promised year after year, decade after decade, that their
economic situation is going to change and it doesn't, then, politically,
they end up focusing on those things that are constant like religion.

They end up feeling this is a place where I can find some refuge.
This is something I can count on. They end up being much more concerned
about votes around things like guns, where traditions have been passed
on from generation to generation. And those are incredibly important to
them. And, yes, what is also true is that wedge issues, hot-button
issues, end up taking prominence in our politics.

And part of the problem is that when those issues are exploited, we
never get to solve the issues that people really have to get some relief
on, whether it's health care or education or jobs.

So, this is something that I've said before. It is something that I
will repeat again. And, yes, people are frustrated and angry about it.

But what we're seeing in this election is the opportunity to break
through that frustration. And that's what our campaign has been about.
Saying that if the American people get involved and engaged, then we are
going to start seeing change. And that's what makes this election unique.

STEPHANOPOULOS: Senator Clinton?

CLINTON: Well, I am the granddaughter of a factory worker from
Scranton who went to work in the Scranton lace mills when he was 11-
years-old. Worked his entire life there, mostly six to eight weeks. He
was also very active in the Court Street Methodist Church. And he
raised three sons and was very proud that he sent all of them to college.

I don't believe that my grandfather or my father or the many people
whom I have had the privilege of knowing and meeting across Pennsylvania
over many years cling to religion when Washington is not listening to them.

I think that is a fundamental sort of misunderstanding of the role
of religion and faith in times that are good and times that are bad.

And I similarly don't think that people cling to
their traditions, like hunting and guns, either, when they are
frustrated with the government. I just don't believe that's how people
live their lives.

Now, that doesn't mean that people are not frustrated with the
government. We have every reason to be frustrated, particularly with
this administration.

But I can see why people would be taken aback and offended by the
remarks. And I think what's important is that we all listen to one
another, and we respect one another, and we understand the different
decisions that people make in life, because we're a stronger country
because of that.

And, certainly, the weeks that I have spent crisscrossing
Pennsylvania, from Erie to Lancaster County, and meeting a lot of
wonderful people, says to me that, despite whatever frustration anyone
has with our government, people are resilient, they are positive, and
they're ready for leadership again that will summon them to something
greater than themselves and that we will deliver on that, if given a chance.

GIBSON: We're going to have some other questions on the same theme,
so you'll be able to get back to that.

STEPHANOPOULOS: Let me pick up on this. When these comments from
Senator Obama broke on Friday, Senator McCain's campaign immediately
said that it was going to be a killer issue in November.

Senator Clinton, when Bill Richardson called you to say he was
endorsing Barack Obama, you told him that Senator Obama can't win. I'm
not going to ask you about that conversation; I know you don't want to
talk about it. But a simple yes or no question: Do you think Senator
Obama can beat John McCain or not?

CLINTON: Well, I think we have to beat John McCain, and I have
every reason to believe we're going to have a Democratic president and
it's going to be either Barack or me. And we're going to make that happen.

And what is important is that we understand exactly the challenges
facing us in order to defeat Senator McCain.

He will be a formidable candidate; there isn't any doubt about
that. He has a great American story to tell. He's a man who has served
our country with distinction over many years, but he has the wrong ideas
about America, and those ideas will be tested in the caldron of this
campaign.

But I also know, having now gone through 16 years of being on the
receiving end of what the Republican Party dishes out, how important it
is that we try to go after every single vote, everywhere we possibly
can, to get to those electoral votes that we're going to need to have
the next president elected.

STEPHANOPOULOS: But the question is: Do you think Senator Obama
can do that? Can he win?

CLINTON: Yes, yes, yes. Now, I think that I can do a better job.

(LAUGHTER)

I mean, obviously, that's why I'm here. I think I am better able
and better prepared, in large measure, because of what I've been
through, and the work that I've done, and the results that I've produced
for people, and the coalition that I have put together in this campaign,
that Charlie referred to earlier.

Obviously, I believe I would be the best president or I would not
still be here standing on this stage, and I believe I'm the better and
stronger candidate against Senator McCain, to go toe-to-toe with him on
national security and on how we turn the economy around.

STEPHANOPOULOS: Senator Obama, do you think Senator Clinton can win?

OBAMA: Absolutely, and I've said so before. But I, too, think that
I'm the better candidate.

(LAUGHTER)

And I don't think that surprises anybody.

Let me just pick up on a couple of things that Senator Clinton said,
though, because during the course of the last few days, you know, she's
said I'm elitist, out of touch, condescending.

Let me be absolutely clear: It would be pretty hard for me to be
condescending towards people of faith since I'm a person of faith and
have done more than most other campaigns in reaching out specifically to
people of faith, and have written about how Democrats make an error when
they don't show up and speak directly to people's faith, because I think
we can get those votes, and I have in the past.

The same is true with respect to gun-owners. I have large numbers
of sportsmen and gun-owners in my home state, and they have supported me
precisely because I have listened to them and I know them well.

So the problem that we have in our politics, which is fairly
typical, is that you take one person's statement, if it's not properly
phrased, and you just beat it to death. And that's what Senator
Clinton's been doing over the last four days.

And I understand that. That's politics. And I expect to have to go
through this process.

But I do think it's important to recognize that it's not helping
that person who's sitting at the kitchen table who is trying to figure
out how to pay the bills at the end of the month.

And Senator Clinton's right: She has gone through this. You know,
I recall when, back in 1992, when she made a statement about how, what
do you expect, should I be at home baking cookies? And people attacked
her for being elitist and this and that.

CLINTON: And I remember watching that on TV and saying, well,
that's not who she is. That's not what she believes. That's not what
she meant.

And I'm sure that that's how she felt, as well. But the problem is
that that's the kind of politics that we've been accustomed to. And I
think Senator Clinton learned the wrong lesson from it because she's
adopting the same tactics.

What the American people want are not distractions. They want to
figure out, how are we going to actually deliver on health care? How
are we going to deliver better jobs for people? How are we going to
improve their incomes? How are we going to send them to college? That's
what we have to focus on. And, yes, they are, in part, frustrated and
angry, because this is what passes for our politics instead of figuring
out how do we build coalitions to actually move things forward.

CLINTON: Well, could I...

GIBSON: Senator Clinton, before I move on, do you want to do a
brief response?

CLINTON: I do. First of all, I want to be very clear. My comments
were about your remarks. And I think that's important because it wasn't
just me responding to them, it was people who heard them, people who
felt as though they were aimed at their values, their quality of life,
the decisions that they have made.

Now, obviously, what we have to do as Democrats, is make sure we get
enough votes to win in November. And as George just said, the
Republicans, who are pretty shrewd about what it takes to win, certainly
did jump on the comments.

But what's important here is what we each stand for and what our
records are, and what we have done over the course of our lives, to try
to improve the circumstances of those who deserve to live up to their
own potential, to make the decisions that are right for them and their
families.

And I think year after year, for, now, 35 years, I have a proven
record of results. And what I'm taking into this campaign is my passion
for empowering people, for giving people the feeling that they can make
a better future for themselves.

And I think it's important that that starts from a base of respect
and connection in order to be able to get people to follow you and
believe that you will lead them in the better direction.

GIBSON: Senator Obama, since you last debated, you made a
significant speech in this building on the subject of race and your
former pastor, the Reverend Jeremiah Wright. And you said subsequent to
giving that speech that you never heard him say from the pulpit the
kinds of things that so have offended people.

But more than a year ago, you rescinded the invitation to him to
attend the event when you announced your candidacy. He was to give the
invocation. And according to the reverend, I'm quoting him, you said to
him: "You can get kind of rough in sermons. So, what we've decided is
that it's best for you not to be out there in public." I'm quoting the
reverend.

But what did you know about his statements that caused you to
rescind that invitation? And if you knew he got rough in sermons, why
did it take you more than a year to publicly disassociate yourself from
his remarks?

OBAMA: Well, understand that I hadn't seen the remarks that ended
up playing on YouTube repeatedly. This was a set of remarks that had
been quoted in Rolling Stone magazine and we looked at them. And I
thought that they would be a distraction, since he had just put them
forward.

But, Charlie, I've discussed this extensively. Reverend Wright is
somebody who made controversial statements, but they were not of the
sort that we saw that offended so many Americans. And that's why I
specifically said that these comments were objectionable. They're not
comments that I believe in. And I disassociated myself with them.

And what I also said was the church and the body of Reverend
Wright's work over the course of 30 years were not represented in those
snippets that were shown on television and that the church has done
outstanding work in ministries, on HIV/AIDS, prison ministries,
providing people with the kind of comfort that we expect in our churches.

And so, what I think I tried to do in the speech here at the
Constitution Center was speak to a broader context, which is that there
is anger in the African-American community that sometimes gets
expressed, whether in the barbershop or in the church. That's true not
just in the African-American community. That's true in other
communities, as well.

But what we have the opportunity to do is to move beyond it. And
that's what I think my candidacy represents. And Senator Clinton
mentioned earlier, that we have to connect with people. That's exactly
what we've done throughout this campaign.

The reason we've attracted new people into the process, the reason
we've generated so much excitement, the reason that we have been so
successful in so many states across the country, bridging racial lines,
bridging some of the old divisions, is because people recognize that,
unless we do, then we're not going to be able to deliver on the promises
that people hear every 4 years, every 8 years, every 12 years.

And it's my job in this campaign to try to move beyond
some of those divisions, because when we are unified there is nothing
that we cannot tackle.

You have said that, "He would not have been my pastor," and you said
that you have to speak out against those kinds of remarks and
implicitly, by getting up and moving, and I presume you mean out of the
church. There are 8,000 members of Senator Obama's church, and we have
heard the inflammatory remarks of Reverend Wright, but so, too, have we
heard testament to many great things that he did.

Do you honestly believe that 8,000 people should have gotten up and
walked out of that church?

CLINTON: I was asked a personal question, Charlie, and I gave a
personal answer. Obviously, one's choice of church and pastor is rooted
in what one believes is what you're seeking in church and what kind of,
you know, fellowship you find in church.

But I have to say that, you know, for Pastor Wright to have given
his first sermon after 9/11 and to have blamed the United States for the
attack, which happened in my city of New York, would have been just
intolerable for me. And, therefore, I would have not been able to stay
in the church.

And maybe it's, you know, just, again, a personal reflection that,
regardless of whatever good is going on, and I have no reason to doubt
that a lot of good things were happening in that church.

You get to choose your pastor. You don't choose your family, but
you get to choose your pastor. And when asked a direct question, I said
I would not have stayed in the church.

OBAMA: Well, let me just respond to two things. Absolutely, many
of these remarks were objectionable. I've already said that I didn't
hear them because I wasn't in church that day. I didn't learn about
those statements until much later. But...

GIBSON: But you did rescind the invitation to him...

OBAMA: But that was on something entirely different, Charlie. That
was on a different statement. And I think that what Senator Clinton
referred to was extremely offensive, to me and a lot of people.

But what I should also point out is that Senator Clinton's former
pastor publicly talked about how Reverend Wright was being caricatured
and that, in fact, this is somebody who had maintained an extraordinary
ministry for many years.

And so there are two important points. Number one, I wasn't aware
of all these statements, and I can understand how people would take offense.

But, number two, the church is a community that extends beyond the
pastor. And that church has done outstanding work for many, many years.

The third point I guess I would make is, once again, that unless we
can bridge some of these divides, we're not going to solve problems in
this country. And what my entire body of work over the last 20 years
has been devoted to is getting blacks, whites, Hispanics, Asians, Native
Americans, young, old to work together, starting when I was a community
organizer.

And my own life embodies that diversity. That's what America is
about, and that's what this campaign has been about.

STEPHANOPOULOS: Senator, two questions. Number one, do you think
Reverend Wright loves America as much as you do? And, number two, if
you get the nomination, what will you do when those sermons are played
on television again and again and again?

OBAMA: You know, George, look, if it's not this, then it would be
something else. I promise you, if Senator Clinton got the nomination,
there will be a whole bunch of video clips about other things.

In a general election, we know that there are going to be all kinds
of attacks launched and leveled. There have been quite a few leveled in
this primary campaign.

And I have confidence in the American people that when you talk to
the American people honestly and directly about what I believe in, what
my plans are on health care, on energy, when they see my track record of
the work that I've done on behalf of people who really need help, I have
absolute confidence that they can rally behind my campaign.

And, you know, the notion that somehow that the American people are
going to be distracted once again by comments not made by me, but
somebody who is associated with me that I have disowned, I think doesn't
give the American people enough credit.

STEPHANOPOULOS: You've disowned him?

OBAMA: The comments, comments that I've disowned. Then that is not
something I...

STEPHANOPOULOS: But you do believe he's as patriotic as you are?

OBAMA: This is somebody who's a former marine. So, I believe that
he loves this country. But I also believe that he's somebody who,
because of the experiences he's had over the course of a lifetime, is
also angry about the injustices that he's had.

GIBSON: I'm getting a little out of balance here. Do you want to
take a few seconds or do you want to go to the next question?

CLINTON: I think in addition to the questions about Reverend Wright
and what he said and when he said it, and for whatever reason he might
have said these things, there were so many different variations on the
explanations that we heard.

And it is something that I think deserves further exploration
because clearly, what we've got to figure out is how we're going to
bring people together in a way that overcomes the anger, overcomes the
divisiveness and whatever bitterness there may be out there. You know?

It is clear that, as leaders, we have a choice who we associate with
and who we apparently give some kind of seal of approval to. And I
think that it wasn't only the specific remarks but some of the
relationships with Reverend Farrakhan, with giving the church bulletin
over to the leader of Hamas, to put a message in.

You know, these are problems. And they raise questions in people's
minds. And, so, this is a legitimate area, as everything is, when we
run for office, for people to be exploring and trying to find answers.

STEPHANOPOULOS: Senator Clinton, we also did a poll today. And
there's also questions about you raised in this poll. About six in 10
voters that we talk to say they don't believe you're honest and
trustworthy. And we asked a lot of Pennsylvania voters for questions
that they had. A lot them raised this honesty issue and your comments
about being under sniper fire in Bosnia. Here's Tom Rooney from Pittsburgh.

(BEGIN VIDEO CLIP) TOM ROONEY, VOTER: Senator Clinton, how do
you reconcile the campaign credibility that you have when you made those
comments about what happened getting off the plane in Bosnia, which
totally misrepresented what really happened on that day? You really lost
my vote. And what can you tell me to get that vote back?

(END VIDEO CLIP)

CLINTON: Well, Tom, I can tell you that I may be a lot of things.
But I'm not dumb. And I wrote about going to Bosnia in my book in
2004. I laid it all out there. And you're right. On a couple of
occasions in the last weeks, I just said some things that weren't in
keeping with what I knew to be the case and what I had written about in
my book.

And, you know, I'm embarrassed by it. I have apologized for it.
I've said it was a mistake. And it is, I hope, something that you can
look over because, clearly, I am proud that I went to Bosnia. It was a
war zone. General Wesley Clark is here in the audience with me, as one
of my major supporters. He and I were talking about it before I came out.

You know, our soldiers were there to try to police and keep the
peace in a very dangerous area. They were totally in battle gear. There
were concerns about potential dangers. The former president of Bosnia
has said he was worried about the safety of the situation.

So, I know that it is something that some people have said wait a
minute. What happened here? But I have talked about this and written
about it. And then, unfortunately, in a few occasions, I was not as
accurate as I have been in the past.

But I know, too, that being able to rely on my experience of having
gone to Bosnia, gone to more than 80 countries, having represented the
United States in so many different settings, gives me a tremendous
advantage going into this campaign, particularly against Senator McCain.

So, I will either try to get more sleep, Tom or, you know, have
somebody that, you know, is there, as a reminder to me. You know, you
can go back for the past 15 months. We both have said things that, you
know, turned out not to be accurate. You know, that happens when you're
talking as much as we have talked. But, you know, I'm very sorry that I
said it. And I have said that, you know, it just didn't jive with what
I had written about and knew to be the truth.

STEPHANOPOULOS: Senator Obama, your campaign has sent out a cascade
of e-mails just about every day, questioning Senator Clinton's
credibility. And you, yourself, said she hasn't been fully truthful
about what she would do as president. Do you believe that Senator
Clinton has been fully truthful about her past?

OBAMA: Well, look, I think that Senator Clinton has a strong
record to run on. She wouldn't be here if she didn't.

And, you know, I haven't commented on the issue of Bosnia. You
know, I...

STEPHANOPOULOS: Your campaign has.

OBAMA: Of course. But the -- because we're asked about it.

But, look, the fact of the matter is, is that both of us are working
as hard as we can to make sure that we're delivering a message to the
American people about what we would do as president. Sometimes that
message is going to be imperfectly delivered because we are recorded
every minute of every day.

And I think Senator Clinton deserves the right to make some errors
once in a while. Obviously, I make some as well.

I think what's important is to make sure that we don't get so
obsessed with gaffes that we lose sight of the fact that this is a
defining moment in our history. We are going to be tackling some of the
biggest issues that any president has dealt with in the last 40 years.

Our economy is teetering not just on the edge of recession but
potentially worse. Our foreign policy is in a shambles. We are
involved in two wars. People's incomes have not gone up, and their
costs have. And we're seeing greater income inequality now than any time since the 1920s.

In those circumstances, for us to be obsessed with this -- these
kinds of errors I think is a mistake. And that's not what our campaign
has been about.

What our campaign has been about is offering some specific solutions
to how we move these issues forward and identifying the need to change
the culture in Washington, which we haven't talked at all about but that
has blocked real reform decade after decade after decade.

That, I think, is the job of the next president of the United
States. That's what I intend to do. That's why I'm running.

(APPLAUSE)

GIBSON: And, Senator Obama, I want to do one more
question, which goes to the basic issue of electability. And it is a
question raised by a voter in Latrobe, Pennsylvania, a woman by the name
of Nash McCabe. Take a look.

(BEGIN VIDEO CLIP)

NASH MCCABE, VOTER: Senator Obama, I have a question, and I want to
know if you believe in the American flag. I am not questioning your
patriotism, but all our servicemen, policemen and EMS wear the flag. I
want to know why you don't.

(END VIDEO CLIP)

GIBSON: Just to add to that, I noticed you put one on yesterday.
But you've talked about this before, but it comes up again and again
when we talk to voters. And, as you may know, it is all over the Internet.

And it's something of a theme that Senators Clinton and McCain's
advisers agree could give you a major vulnerability if you're the
candidate in November.

How do you convince Democrats that this would not be a vulnerability?

OBAMA: Well, look, I revere the American flag. And I would not be
running for president if I did not revere this country.

This is -- I would not be standing here if it wasn't for this
country. And I've said this -- again, there's no other country in which
my story is even possible. Somebody who was born to a teenage mom,
raised by a single mother and grandparents from small towns in Kansas,
you know, who was able to get an education and rise to the point where I
can run for the highest office in the land, I could not help but love
this country for all that it's given me.

And so, what I've tried to do is to show my patriotism by how I
treat veterans when I'm working in the Senate Veterans Affairs
Committee; by making sure that I'm speaking forcefully about how we need
to bring this war in Iraq to a close, because I think it is not serving
our national security well and it's not serving our military families
and our troops well; talking about how we need to restore a sense of
economic fairness to this country, because that's what this country has
always been about, is providing upward mobility and ladders to
opportunity for all Americans.

That's what I love about this country. And so I will continue to
fight for those issues.

And I am absolutely confident that during the general election, that
when I'm in a debate with John McCain, people are not going to be
questioning my patriotism; they are going to be questioning, how can you
make people's lives a little bit better?

And let me just make one last point on this issue of
the flag pin. As you've noted, I wore one yesterday when a veteran
handed it to me, who himself was disabled and works on behalf of
disabled veterans.

I have never said that I don't wear flag pins or refuse to wear flag
pins. This is the kind of manufactured issue that our politics has
become obsessed with and, once again, distracts us from what should be
my job when I'm commander-in-chief, which is going to be figuring out
how we get our troops out of Iraq and how we actually make our economy
better for the American people.

STEPHANOPOULOS: And, Senator, if you get the nomination, you'll have...

(APPLAUSE)

... to beat back these distractions.

And I want to give Senator Clinton a chance to respond, but first a
follow-up on this issue, general theme of patriotism, in your
relationships. A gentleman named William Ayers. He was part of the
Weather Underground in the 1970s. They bombed the Pentagon, the
Capitol, and other buildings. He's never apologized for that.

And, in fact, on 9/11, he was quoted in the New York Times saying,
"I don't regret setting bombs. I feel we didn't do enough." An early
organizing meeting for your State Senate campaign was held at his house
and your campaign has said you are "friendly."

Can you explain that relationship for the voters and explain to
Democrats why it won't be a problem?

OBAMA: George, but this is an example of what I'm talking about.
This is a guy who lives in my neighborhood, who's a professor of English
in Chicago who I know and who I have not received some official
endorsement from. He's not somebody who I exchange ideas from on a
regular basis.

And the notion that somehow as a consequence of me knowing somebody
who engaged in detestable acts 40 years ago, when I was 8 years old,
somehow reflects on me and my values doesn't make much sense, George.

The fact is that I'm also friendly with Tom Coburn, one of the most
conservative Republicans in the United States Senate, who, during his
campaign, once said that it might be appropriate to apply the death
penalty to those who carried out abortions.

Do I need to apologize for Mr. Coburn's statements? Because I
certainly don't agree with those, either.

So this kind of game in which anybody who I know, regardless of how
flimsy the relationship is, that somehow their ideas could be attributed
to me, I think the American people are smarter than that. They're not
going to suggest somehow that that is reflective of my views, because it
obviously isn't.

CLINTON: Well, I think that is a fair general statement, but I also
believe that Senator Obama served on a board with Mr. Ayers for a period
of time, the Woods Foundation, which was a paid directorship position.

And, if I'm not mistaken, that relationship with Mr. Ayers on this
board continued after 9/11 and after his reported comments, which were
deeply hurtful to people in New York and, I would hope, to every
American, because they were published on 9/11, and he said that he was
just sorry they hadn't done more.

And what they did was set bombs. And in some instances, people
died. So it is -- I think it is, again, an issue that people will be
asking about.

And I have no doubt -- I know Senator Obama's a good man and I
respect him greatly, but I think that this is an issue that certainly
the Republicans will be raising.

And it goes to this larger set of concerns about how we are going to
run against John McCain. You know, I wish the Republicans would
apologize for the disaster of the Bush-Cheney years and not run anybody,
just say that it's time for the Democrats to go back into the White House.

(APPLAUSE)

Unfortunately, they don't seem to be willing to do that. So we know
that they're going to be out there, full force.

And, you know, I've been in this arena for a long time. I have a
lot of baggage, and everybody has rummaged through it for years.

(LAUGHTER)

And so, therefore, I have an opportunity to come to this campaign
with a very strong conviction and feeling that I will be able to
withstand whatever the Republicans send our way.

OBAMA: Look, I'm going to have to respond to this just really
quickly, but by Senator Clinton's own vetting standards, I don't think
she would make it, since President Clinton pardoned or commuted the
sentences of two members of the Weather Underground, which I think is a
slightly more significant act...

(APPLAUSE)

GIBSON: Please.

OBAMA: ... than me serving on a board with somebody for actions
that he did 40 years ago.

Look, there is no doubt, that the Republicans will
attack either of us. What I've been able to display during the course
of this primary, is that I can take a punch. I've taken some pretty
good ones from Senator Clinton.

And I don't begrudge her of that. That's part of what the political
contest is about. I am looking forward to having a debate with John
McCain. And I think every poll indicates that I am doing just as well,
if not better, in pulling together the coalition that will defeat John
McCain.

When it comes to November and people go to the polling place,
they're going to be asking, are we going to go through four more years
of George Bush economic policies? Are we going through four more years
of George Bush foreign policy? If we as Democrats and if I as the
nominee have put forward a clear vision for how we're going to move the
country forward, deal with issues like energy dependence, lower gas
prices, provide health care, get our troops out of Iraq, that is a
debate that I'm happy to have and a debate that I'm confident that I can
win.

GIBSON: And, Senator Clinton, I'm getting out of balance in terms
of time. You're getting short-changed here. If you want to reply here,
fine. If you want to wait, we'll do it in the next half hour.

CLINTON: We can wait.
GIBSON: All right. We'll take a commercial break. We will come
back to the Democratic debate from the city of Philadelphia, before the
Pennsylvania primary. We'll continue. Stay with us.

(BEGIN VIDEO CLIP)

GIBSON: "The president shall be commander-in-chief of the Army and
Navy of the United States and of the militia of the several states, when
called into the actual service of the United States."

(END VIDEO CLIP)

ANNOUNCER: Live coverage from the National Constitution Center in
Philadelphia, continues. Here, again, Charles Gibson and George
Stephanopoulos.

GIBSON: Another quote from the Constitution, apropos, because we
are here, as the -- you heard just a moment ago at the Constitution Center.

Senator Clinton, a question for you. We talked about the military
applications from the Constitution. And this is a question that
involves the war in Iraq. It comes from Mandy Garber of Pittsburgh.

Take a look.

(BEGIN VIDEO CLIP)

MANDY GARBER, PITTSBURGH, PENNSYLVANIA: The real question is, I
mean, do the candidates have a real plan to get us out of Iraq, or is it
just real campaign propaganda? And it's really unclear. They keep
saying we want to bring the troops back. But considering what's
happening on the ground, how is that going to happen?

(END VIDEO CLIP)

GIBSON: Let me just add a little bit to that question, because your
communications director of your campaign, Howard Wolfson, on a
conference call recently was asked, is Senator Clinton going to stick to
her announced plan of bringing one or two brigades out of Iraq every
month, whatever the realities on the ground?

And Wolfson said, I'm giving you a one-word answer so we can be
clear about it. The answer is, yes. So, if the military commanders in
Iraq came to you on day one, and said, this kind of withdrawal would
destabilize Iraq, it would set back all of the gains that we have made,
no matter what, you're going to order those troops to come home?

CLINTON: Yes, I am, Charlie. And here's why. Thankfully, we have a
system in our country, of civilian control of the military. And our
professional military are the best in the world. They give their best
advice. And then they execute the policies of the president.

I have watched this president, as he has continued to change the
rationale and move the goal posts when it comes to Iraq. And I am
convinced that it is in America's best interests, it is in the best
interests of our military, and I even believe it is in the best
interests of Iraq that upon taking office I will ask the secretary of
defense and the Joint Chiefs of Staff, and my security advisers to
immediately put together for me a plan so that I can begin to withdraw
within 60 days.

I will make it very clear that we will do so in a responsible and
careful manner because, obviously, withdrawing troops and equipment, is
dangerous. I will also make it clear to the Iraqis that they no longer
have a blank check from the president of the United States.

Because I believe that it will be only through our commitment to
withdrawal that the Iraqis will begin to do what they have failed to do
for all of these years. I will also begin an intensive diplomatic
effort, both within the region and internationally, to begin to try to
get other countries to understand the stakes that we all face when it
comes to the future of Iraq.

But I have been convinced and very clear that I will begin to
withdraw troops within 60 days. And we've had other instances in our
history where some military commanders have been very publicly opposed
to what a president was proposing to do. But I think it's important
that this decision be made. And I intend to make it.

GIBSON: But Senator Clinton, aren't you saying -- General Petraeus
was in Washington. You both were there when he testified. Saying that
the gains in Iraq are fragile and are reversible. Are you essentially
saying: I know better than the military commanders here?

CLINTON: No, what I'm saying, Charlie, is that no one can
predict what will happen. There are many different scenarios.

But one thing I am sure of is that our staying in Iraq, our
continuing to lose our men and women in uniform, having many injured,
the Iraqi casualties that we are seeing, as well, is there -- is no way
for us to maintain a strong position in the world.

It's not only about Iraq. It is about ending the war in Iraq so
that we can begin paying attention to all of the other problems we have.

There isn't any doubt that Afghanistan has been neglected. It has
not gotten the resources that it needs. We hear that from our military
commanders responsible for that region of the world.

And there are other problems that we have failed to address.

So the bottom line for me is: We don't know what will happen as we
withdraw. We do know what will happen if we stay mired in Iraq.

The Iraqi government will not accept responsibility for its own
future. Our military will continue to be stretched thin. And our
soldiers will be on their second, third, even their fourth deployment.
And we will not be able to re-assert our leadership and our moral
authority in the world.

And I think those are the kind of broad issues that a president has
to take into account.

GIBSON: And, Senator Obama, your campaign manager, David Plouffe,
said, "When he is" -- this is talking about you -- "When he is elected
president, we will be out of Iraq in 16 months at the most. There should
be no confusion about that."

So you'd give the same rock-hard pledge, that no matter what the
military commanders said, you would give the order to bring them home?

OBAMA: Because the commander-in-chief sets the mission, Charlie.

That's not the role of the generals.

And one of the things that's been interesting about the president's
approach lately has been to say, "Well, I'm just taking cues from
General Petraeus."

Well, the president sets the mission. The general and our troops
carry out that mission. And, unfortunately, we have had a bad mission
set by our civilian leadership, which our military has performed
brilliantly. But it is time for us to set a strategy that is going to
make the American people safer.

Now, I will always listen to our commanders on the ground with
respect to tactics, once I've given them a new mission, that we are
going to proceed deliberately, in an orderly fashion, out of Iraq, and
we are going to have our combat troops out. We will not have permanent
bases there.

Once I have provided that mission, if they come to me and want to
adjust tactics, then I will certainly take their recommendations into
consideration. But, ultimately, the buck stops with me as the
commander-in-chief.

And what I have to look at is not just the situation in Iraq, but
the fact that we continue to see Al Qaida getting stronger in
Afghanistan and in Pakistan. We continue to see anti-American sentiment
fanned all across the Middle East.

We are overstretched in a way -- we do not have a strategic reserve
at this point. If there was another crisis that was taking place, we
would not have a brigade that we could send to deal with that crisis
that isn't already scheduled to be deployed in Iraq.

That is not sustainable; that's not smart. National security policy
is going to change when I'm president.

STEPHANOPOULOS: Senator Obama, let's stay in the region. Iran
continues to pursue a nuclear option. Those weapons, if they got them,
would probably pose the greatest threat to Israel.

During the Cold War, it was the United States policy to extend
deterrence to our NATO allies. An attack on Great Britain would be
treated as if it were an attack on the United States.

Should it be U.S. policy now to treat on Iranian attack on Israel as
if it were an attack against the United States?

OBAMA: Well, our first step should be to keep nuclear weapons out
of the hands of the Iranians. And that has to be one of our top
priorities, and I will make it one of our top priorities when I'm
president of the United States.

I have said I will do whatever is required to prevent the Iranians
from obtaining nuclear weapons.

I believe that that includes direct talks with the Iranians, where
we are laying out very clearly for them: Here are the issues that we
find unacceptable, not only development of nuclear weapons, but also
funding terrorist organizations like Hamas and Hezbollah, as well as
their anti-Israel rhetoric and threats toward Israel.

I believe that we can offer them carrots and sticks, but we've got
to directly engage and make absolutely clear to them what our posture
is. Now, my belief is that they should also know that I will take
no options off the table when it comes to preventing them from using
nuclear weapons or obtaining nuclear weapons.

And that would include any threats directed at Israel,
or any of our allies.

STEPHANOPOULOS: So you would extend our deterrent to Israel?

OBAMA: As I said before, I think it is very important that Iran
understands that an attack on Israel, is an attack on our strongest ally
in the region, one that we -- one whose security, we consider
paramount. And that would be an act of aggression that we would -- that
I would consider an attack that is unacceptable. And the United States
would take appropriate action.

STEPHANOPOULOS: Senator Clinton, would you?

CLINTON: Well, in fact, George, I think that we should be looking
to create an umbrella of deterrence that goes much further than just
Israel. Of course, I would make it clear to the Iranians that an attack
on Israel would incur massive retaliation from the United States.

But I would do the same with other countries in the region. We are
at a very dangerous point with Iran. The Bush policy has failed. Iran
has not been deterred. They continue to try to not only obtain the
fissile material for nuclear weapons, but they are intent upon using
their efforts to intimidate the region and to have their way when it
comes to the support of terrorism in Lebanon and elsewhere.

And I think that this is an opportunity, with skillful diplomacy,
for the United States, to go to the region and enlist the region in a
security agreement vis-a-vis Iran.

It would give us three tools we now don't have. Number one, we've
got to begin diplomatic engagement with Iran. And we want the region
and the world to understand how serious we are about it. I would begin
those discussions at a low level. I certainly would not meet with
Ahmadinejad because even again today he made light of 9/11, and said
that he's not even sure it happened and that people actually died.

He's not someone who would have an opportunity to meet with me in
the White House. But I would have a diplomatic process that would
engage him.

And secondly, we've got to deter other countries from feeling they
have to acquire nuclear weapons. You can't go to the Saudis or the
Kuwaitis or UAE and others who have a legitimate concern about Iran and
say, well, don't acquire these weapons to defend yourself unless you're
also willing to say we will provide a deterrent backup.

And we will let the Iranians know, that, yes, an attack on Israel
would trigger massive retaliation. But so would an attack on those
countries that are willing to go under the security umbrella and
forswear their own nuclear ambitions. And finally, we cannot permit
Iran to become a nuclear weapons power. And this administration has
failed in our efforts to convince the rest of the world that that is a
danger, not only to us, and not just to Israel but to the region and beyond.

Therefore, we have not to have this process that reaches out beyond
even who we would put under the security umbrella, to get the rest of
the world on our side to try to impose the kind of sanctions and
diplomatic efforts that might prevent this from occurring.

STEPHANOPOULOS: Let me turn to the economy. That is the No. 1
issue on Americans' minds right now. Yesterday, Senator McCain signaled
that the No. 1 one issue in the general election campaign on the economy
is going to be taxes. And he says that both of you are going to raise
taxes not just on the wealthy, but on everyone. Here's what he said in
his speech yesterday.

(BEGIN VIDEO CLIP)

SEN. JOHN MCCAIN, R-ARIZ.: All these tax increases are under the
fine print of the slogan hope. They're going to raise your taxes by
thousands of dollars a year and they have the audacity to hope you don't
mind.

(END VIDEO CLIP)

STEPHANOPOULOS: Senator Clinton, two-part question. Two-part
question. Can you make an absolute "read my lips" pledge, that there
will be no tax increases of any kind, for anyone earning under $200,000
a year? And if the economy is as weak a year from now, as it is today,
will you continue -- will you persist in your plans to roll back the
President Bush's tax cuts for wealthier Americans?

CLINTON: Well, George, I have made a commitment that I will let the
taxes on people making more than $250,000 a year go back to the rates
that they were paying in the 1990s.

STEPHANOPOULOS: Even if the economy is weak?

CLINTON: Yes, and here's why. Number one, I do not believe
that it will detrimentally affect the economy by doing that. As I
recall, you know, we used that tool during the 1990s to very good
effect. And I think we can do so again.

I am absolutely committed to not raising a single tax on middle-
class Americans, people making less than $250,000 a year.

In fact, I have a very specific plan of $100 billion in tax cuts
that would go to help people afford health care, security retirement
plans, you know, make it possible for people to get long-term care
insurance and care for their parents and grandparents who they are
trying to support, making college affordable and so much else.

Well, if you look at how we'd have to sequence that, we might not be
able to do all of that at once. But if you go to my Web site,
hillaryclinton.com, it is laid out there how I will pay for everything.
Because everything I have proposed, I have put in how I would pay for it.

STEPHANOPOULOS: An absolute commitment, no middle-class tax
increases of any kind?

CLINTON: No. That's right. That is my commitment.

GIBSON: Senator Obama?

STEPHANOPOULOS: Would you take the same pledge?

OBAMA: Well, I not only have pledged not to raise their taxes, I've
been the first candidate in this race to specifically say I would cut
their taxes.

One of the centerpieces of my economic plan would be to say that we
are going to offset the payroll tax, the most regressive of our taxes,
so that families who are earning -- who are middle-income, individuals
making $75,000 a year or less, that they would get a tax break so that
families would see up to a thousand dollars' worth of relief.

Senior citizens who have earnings of less than $50,000 wouldn't have
to pay income tax on their Social Security. And middle-class homeowners
who currently don't itemize on their tax filings, they would be able to
get a deduction the same way that wealthy individuals do.

Now, here's the reason why that's important. We have seen wages and incomes
flat or declining at a time when costs have gone up. And one of the
things that we've learned from George Bush's economic policies, which
John McCain now wants to follow, is that pain trickles up.

And so, partly because people have been strapped and have had a
tough time making ends meet, we're now seeing a deteriorating housing
market. That also is a consequence of the lack of oversight and
regulation of these banks and financial institutions that gave loans
that they shouldn't have. And part of it has to do with the fact that
you had $185 million by mortgage lenders spent on lobbyists and special
interests who were writing these laws.

So the rules in Washington -- the tax code has been written on
behalf of the well-connected. Our trade laws have -- the same thing has
happened. And part of how we're going to be able to deliver on
middle-class tax relief is to change how business is done in Washington,
and that's been a central focus of our campaign.

GIBSON: Senator Obama, you both have now just taken this pledge on
people under $250,000 -- and 200-and-what? $250,000?

OBAMA: Well, it depends on how you calculate it, but it would be
between $200,000 and $250,000.

GIBSON: All right. You have, however, said you would favor an
increase in the capital gains tax. As a matter of fact, you said on
CNBC, and I quote, "I certainly would not go above what existed under
Bill Clinton," which was 28 percent. It's now 15 percent. That's
almost a doubling, if you went to 28 percent.

But actually, Bill Clinton, in 1997, signed legislation that dropped
the capital gains tax to 20 percent.

OBAMA: Right.

GIBSON: And George Bush has taken it down to 15 percent.

OBAMA: Right.

GIBSON: And in each instance, when the rate dropped, revenues from
the tax increased; the government took in more money. And in the 1980s,
when the tax was increased to 28 percent, the revenues went down.

So why raise it at all, especially given the fact that 100 million
people in this country own stock and would be affected?

OBAMA: Well, Charlie, what I've said is that I would look at
raising the capital gains tax for purposes of fairness.

We saw an article today which showed that the top 50 hedge fund
managers made $29 billion last year -- $29 billion for 50 individuals.
And part of what has happened is that those who are able to work the
stock market and amass huge fortunes on capital gains are paying a lower
tax rate than their secretaries. That's not fair.

And what I want is not oppressive taxation. I want businesses to
thrive, and I want people to be rewarded for their success. But what I
also want to make sure is that our tax system is fair and that we are
able to finance health care for Americans who currently don't have it
and that we're able to invest in our infrastructure and invest in our
schools.

And you can't do that for free.

OBAMA: And you can't take out a credit card from the Bank of
China in the name of our children and our grandchildren, and then say
that you're cutting taxes, which is essentially what John McCain has
been talking about.

And that is irresponsible. I believe in the principle that you pay
as you go. And, you know, you don't propose tax cuts, unless you are
closing other tax breaks for individuals. And you don't increase
spending, unless you're eliminating some spending or you're finding some
new revenue. That's how we got an additional $4 trillion worth of debt
under George Bush. That is helping to undermine our economy. And it's
going to change when I'm president of the United States.

GIBSON: But history shows that when you drop the capital gains tax,
the revenues go up.

OBAMA: Well, that might happen, or it might not. It depends on
what's happening on Wall Street and how business is going. I think the
biggest problem that we've got on Wall Street right now is the fact that
we got have a housing crisis that this president has not been attentive
to and that it took John McCain three tries before he got it right.

And if we can stabilize that market, and we can get credit flowing
again, then I think we'll see stocks do well. And once again, I think
we can generate the revenue that we need to run this government and
hopefully to pay down some of this debt.

GIBSON: Senator Clinton?

CLINTON: Well, let me start by saying that I think we know that
we've got to get back to an economy that works for everyone. The
president has been very good for people who are doing well. And that's
great. But it was better for our country when we had an economy that
lifted everyone up at the same time.

And we had that during the 1990s. You know, 22.7 million new jobs.
More people lifted out of poverty than any time in our recent history.
The typical family saw $7,000 increase in income. And we have lost that.

You know, now, the typical family has lost at least $1,000. And the
fact is that, you know, I don't want to take one more penny of tax money
from anybody. But what I want to do is make some smart investments.
And I was the first to come out with the strategic energy fund, where we
need to be investing in clean, renewable energy. And I think we can put
5 million Americans to work.

I think we need to invest in our infrastructure. That also will get
the economy moving again. And I believe we can put about 3 million
people to work, and good union jobs, where people get a good wage with a
good set of benefits that can support a middle class family with a
rising standard of living.

I want to see us actually tackle the housing crisis, something I've
been talking about for over a year. If I had been president a year ago,
I believe we would have begun to avoid some of the worst of the mortgage
and credit crisis because we would have started much earlier than we have.

In fact, I don't think we've really done very much at all yet in
dealing with a way of freezing home foreclosures, of freezing interest
rates, getting money into communities to be able to withstand the
problems that are cause by foreclosures.

Governor Rendell has done a great job in Pennsylvania. He saw this
coming. And unlike our current president, who either didn't know it or
didn't care about it, he has really held the line. And Pennsylvania has
been much less affected by home foreclosures.

But the president hasn't done that. And what I have proposed would
do that. So, you've got to look at the entire economy. And from my
perspective, yes, taxes is a piece of it. But you've got to figure out
what is it we would invest in that would make us richer and safer and
stronger tomorrow, which would help everybody.

GIBSON: I'm going to go to commercial break. But I just want to
come back because of one thing you said. And I want to be clear, the
question was about capital gains tax. Would you say, no, I'm not going
to raise capital gains taxes?

CLINTON: I wouldn't raise it above the 20 percent, if I raised it
at all. I would not raise it above what it was during the Clinton
administration.

GIBSON: If I raised it at all. Would you propose an increase in
the capital gains tax?

CLINTON: You know, Charlie, I'm going to have to look and see what
the revenue situation is. You know, we now have the largest budget
deficit we've ever had, $311 billion. We went from a $5.6 trillion
projected surplus, to what we have today, which is a $9 trillion debt.
I don't want to raise taxes against on anybody.

I'm certainly against one of Senator Obama's ideas, which is to lift
the cap on the payroll tax, because that would impose additional taxes
on people who are educators here in the Philadelphia area, or in the
suburbs, police officers, firefighters and the like.

So I think we have to be very careful about how we navigate this. So
the $250,000 mark is where I'm sure we're going. But beyond that, we
are going to have to look and see where we are.

GIBSON: Very quickly, because I owe Senator Clinton time, but do
you want to respond?

OBAMA: Well, Charlie, I just have to respond real quickly to
Senator Clinton's last comment. What I have proposed is that we raise
the cap on the payroll tax because millionaires and billionaires don't
have to pay beyond $97,000 a year. That is where it is capped.

Now, most firefighters, most teachers, you know,
they're not making over $100,000 a year. In fact, only 6 percent of the
population does.

And I've also said that I'd be willing to look at exempting people
who are making slightly above that.

But understand the alternative is that, because we're going to have
fewer workers to more retirees, if we don't do anything on Social
Security, then those benefits will effectively be cut because we'll be
running out of money.

GIBSON: But, Senator, but that's a tax. That's a tax...

OBAMA: Well, no, no, look...

GIBSON: ... on people under $250,000.

OBAMA: Let me finish my point here, Charlie. Senator Clinton said
she certainly wouldn't do this, this was a bad idea. In Iowa, when she
was outside of camera range, said to an individual there she'd certainly
consider the idea and then that was recorded. And she apparently wasn't
aware that it was being recorded.

So this is an option that I would strongly consider, because the
alternatives, like raising the retirement age or cutting benefits or
raising the payroll tax on everybody, including people who make less
than $97,000 a year...

GIBSON: But there's a heck of a lot of...

OBAMA: ... those are not good policy options.

GIBSON: There's a heck of a lot of people between $97,000 and
$200,000 and $250,000. If you raise the payroll taxes...

OBAMA: And that's...

GIBSON: ... that's going to raise taxes on them.

OBAMA: And that's why I've said, Charlie, that I would look at
potentially exempting those who are in between.

But the point is we're going to have to capture some revenue in
order to stabilize the Social Security system. You can't get something
for nothing. And if we care about Social Security, which I do, and if
we are firm in our commitment to make sure that it's going to be there
for the next generation, and not just for our generation, then we have
an obligation to figure out how to stabilize the system.

And I think we should be honest in presenting our ideas in terms of
how we're going to do that and not just say that we're going to form a
commission and try to solve the problem some other way.

CLINTON: Well, in fact, I am totally committed to making sure
Social Security is solvent. If we had stayed on the path we were on at
the end of my husband's administration, we sure would be in a lot better
position, because we had a plan to extend the life of the Social
Security Trust Fund and, again, President Bush decided that that wasn't
a priority, that the war in Iraq and tax cuts for the wealthiest of
Americans were his priorities, neither of which he's ever paid for.

I think it's the first time we've ever been taken to war and had a
president who wouldn't pay for it.

But when it comes to Social Security, fiscal responsibility is the
first and most important step. You've got to begin to rein in the
budget, pay as you go, to try to replenish our Social Security Trust Fund.

And, with all due respect, the last time we had a crisis in Social
Security was 1983. President Reagan and Speaker Tip O'Neill came up
with a commission. That was the best and smartest way, because you've
got to get Republicans and Democrats together. That's what I will do.

And I will say, number one, don't cut benefits on current
beneficiaries. They're already having a hard enough time. And, number
two, do not impose additional tax burdens on middle-class families.

There are lots of ways we can fix Social Security that don't impose
those burdens, and I will do that.

OBAMA: That commission raised the retirement age, Charlie, and also
raised the payroll tax. And so Senator Clinton -- she can't have it
both ways. You can't come at me for proposing a solution that will save
Social Security without burdening middle-income Americans and then
suggest that somehow she's got a magic solution.

CLINTON: But there are more progressive ways of doing it than, you
know, lifting the cap. And I think we'll work it out. I have every
confidence we're going to work it out. I know that we can make this happen.

GIBSON: On that point, we're going to take a break, commercial
break. The Democratic debate from here in Philadelphia, before the
Pennsylvania primary, will continue. Stay with us. We'll be back.

(COMMERCIAL BREAK)

ANNOUNCER: A well regulated militia being necessary to the security
of a free state, the right of the people to keep and bear arms shall not
be infringed. Live from the National Constitution Center in
Philadelphia, Pennsylvania, once again, Charles Gibson and George
Stephanopoulos.

GIBSON: Back to the Philadelphia debate, the Democratic debate,
just less than a week now before the Pennsylvania primary. And I would
be remiss, tonight, if I didn't take note of the fact that today is the
one-year anniversary of Virginia Tech. And I think it's fair to say
that probably every American during this day at one point or another,
said a small prayer for the great people of that university and for
those who died.

It also, I suspect, makes this an appropriate time to talk about
guns. And it has not been talked about much in this campaign. And it's
an important issue in the state of Pennsylvania. Both of you, in the
past, have supported strong gun control measures. But now, when I
listen to you on the campaign, I hear you emphasizing that you believe
in an individual's right to bear arms. Both of you were strong
advocates for licensing of guns. Both of you were strong advocates for
the registration of guns.

Why don't you emphasize that now, Senator Clinton?

CLINTON: Well, Charlie, on Friday, I was with Mayor Nutter,
who is here, in west Philadelphia, at the YMCA there, to talk about what
we could do together to bring down the crime rate that has ravaged
Philadelphia.

You know, more than one person, on average, a day is murdered in
Philadelphia. And Mayor Nutter is very committed, as the mayor of this
great city, to try to do what he can to stem the violence.

And what I said then is what I have been saying, that I will be a
good partner for cities like Philadelphia as president, because I will
bring back the COPS program, the so-called COPS program, where we had
100,000 police on the streets, which really helped drive down the crime
rate and also helped create better community relations.

I will also work to reinstate the assault weapons ban. We had it
during the 1990s. It really was an aid to our police officers, who are
now, once again, because it has lapsed and the Republicans will not
reinstate it, are being outgunned on our streets by these military-style
weapons.

I will also work to make sure that police departments in
Philadelphia, Pittsburgh, Harrisburg, across America, get access to the
federal information that will enable them to track illegal guns. Because
the numbers are astounding. Probably 80 percent of the guns used in gun
crimes are in the hands of that criminal, that gang member,
unfortunately people who are sometimes, you know, mentally challenged,
because it got there illegally. And under the Republicans, that
information was kept from local law enforcement.

So I believe that we can balance what I think is the right
equation. I respect the Second Amendment. I respect the rights of
lawful gun owners to own guns, to use their guns. But I also believe
that most lawful gun owners, whom I have spoken with for many years
across our country, also want to be sure that we keep those guns out of
the wrong hands.

And as president, I will work to try to bridge this divide, which I
think has been polarizing and, frankly, doesn't reflect the common sense
of the American people.

So we will strike the right balance to protect the constitutional
right but to give people the feeling and the reality that they will be
protected from guns in the wrong hands.

GIBSON: Senator Obama, the District of Columbia has a law -- it's
had a law since 1976; it's now before the United States Supreme Court --
that prohibits ownership of handguns, a sawed-off shotgun, a machine gun
or a short-barrelled rifle.

Is that a law consistent with an individual's right to bear arms?

OBAMA: Well, Charlie, I confess I obviously haven't listened to the
briefs and looked at all the evidence.

As a general principle, I believe that the Constitution confers an
individual right to bear arms. But just because you have an individual
right does not mean that the state or local government can't constrain
the exercise of that right, and, you know, in the same way that we have
a right to private property but local governments can establish zoning
ordinances that determine how you can use it.

And I think that it is going to be important for us to reconcile
what are two realities in this country.

There's the reality of gun ownership and the tradition of gun
ownership that's passed on from generation to generation. You know,
when you listen to people who have hunted, and they talk about the fact
that they went hunting with their fathers or their mothers, then that is
something that is deeply important to them and, culturally, they care
about deeply.

But you also have the reality of what's happening here in
Philadelphia and what's happening in Chicago.

And...

GIBSON: But do you still favor the registration of guns? Do you
still favor the licensing of guns?

And in 1996, your campaign issued a questionnaire, and your writing
was on the questionnaire that said you favored a ban on handguns.

OBAMA: No, my writing wasn't on that particular questionnaire,
Charlie. As I said, I have never favored an all-out ban on handguns.

What I think we can provide is common-sense approaches to the issue
of illegal guns that are ending up on the streets. We can make sure
that criminals don't have guns in their hands. We can make certain that
those who are mentally deranged are not getting a hold of handguns.

We
can trace guns that have been used in crimes to unscrupulous gun dealers
that may be selling to straw purchasers and dumping them on the streets.

The point is, is that what we have to do is get beyond the politics
of this issue and figure out what, in fact, is working.

Look, in my hometown of Chicago, on the south side of Chicago, we've
had 34 gun deaths last year of Chicago public school children.

And I think that most law-abiding gun owners all
across America would recognize that it is perfectly appropriate for
local communities and states and the federal government to try to figure
out, how do we stop that kind of killing?

STEPHANOPOULOS: Senator Clinton, you have a home in D.C. Do you
support the D.C. ban?

CLINTON: You know, George, I want to give local communities the
opportunity to have some authority over determining how to keep their
citizens safe.

This case you're referring to before the Supreme Court is apparently
dividing the Bush administration. You know, the Bush administration
basically said, "We don't have enough facts to know whether or not it is
appropriate."

And Vice President Cheney, who you know is a fourth, special branch
of government all unto himself, has actually filed a brief, saying, "Oh,
no, we have to -- you know, he have to prevent D.C. from doing this."

STEPHANOPOULOS: But what do you think? Do you support it or not?

CLINTON: What I support is sensible regulation that is consistent
with the constitutional right to own and bear arms.

STEPHANOPOULOS: Is the D.C. ban consistent with that right?

CLINTON: Well, I think a total ban with no exceptions under any
circumstances might be found by the court not to be, but I don't know
the facts.

But I don't think that should blow open a hole that says that D.C.
or Philadelphia or anybody else cannot come up with sensible regulations
to protect their people and keep, you know, machine guns and assault
weapons out of the hands of folks who shouldn't have them.

GIBSON: Well, with all due respect, I'm not sure I got an answer
from Senator Obama, but do you still favor licensing and registration of
handguns?

CLINTON: What I favor is what works in New York. You know, we have
a set of rules in New York City, and we have a totally different set of
rules in the rest of the state. What might work in New York City is
certainly not going to work in Montana.

So for the federal government to be having any kind of, you know,
blanket rules that they're going to try to impose I think doesn't make
sense.

STEPHANOPOULOS: But, Senator, you were for that when you ran for
Senate in New York.

CLINTON: I was for the New York rules; that's right. I was for the
New York rules, because they have worked over time. And there isn't a
lot uproar in New York about changing them, because I go to upstate New
York, where we have a lot of hunters and people who are collectors and
people who are sport shooters. They have every reason to believe that
their rights are being respected.

You walk down the street with a police officer in Manhattan, he
wants to be sure that there is some way of protecting him and protecting
the people that are in his charge.

STEPHANOPOULOS: Senator Obama, last May we talked about affirmative
action, and you said at the time that affluent African- Americans, like
your daughters, should probably be treated as pretty advantaged when
they apply to college and that poor, white children, kids, should get
special consideration, affirmative action.

So as president, how specifically would you recommend changing
affirmative action policies so that affluent African-Americans are not
given advantages and poor, less affluent whites are?

OBAMA: Well, I think that the basic principle that should guide
discussions not just of affirmative action, but how we are admitting
young people to college generally, is how do we make sure that we're
providing ladders of opportunity for people? How do we make sure that
every child in America has a decent shot in pursuing their dreams?

And race is still a factor in our society. And I think that for
universities and other institutions to say, "You know, we're going to
take into account the hardships that somebody has experienced because
they're black or Latino or because they're a woman"...

STEPHANOPOULOS: Even if they're wealthy?

OBAMA: ... I think that's something that they can take into
account, but it can only be in the context of looking at the whole
situation of the young person.

So if they look at my child, and they say, "You know, Malia and
Sasha, they've had a pretty good deal," then that shouldn't be factored in.

On the other hand, if there's a young white person, who has been
working hard, struggling, and has overcome great odds, that's something
that should be taken into account.

So I still believe in affirmative action as a means of overcoming
both historic and potentially current discrimination, but I think that
it can't be a quota system and it can't be something that is simply
applied without looking at the whole person, whether that person is
black, or white, or Hispanic, male or female.

What we want to do is make sure that people who've been locked out
of opportunity are going to be able to walk through those doors of
opportunity in the future.

STEPHANOPOULOS: Senator Clinton, would you agree to that kind of
change?

CLINTON: Well, here's the way I'd prefer to think about it. I
think we've got to have affirmative action generally to try to give more
opportunities to young people from disadvantaged backgrounds, whoever
they are.

That's why I'm a strong supporter of early childhood education and
universal pre-kindergarten.

That's why I'm against No Child Left Behind as it is
currently operating, and I would end it, because we can do so much
better to have an education system that really focuses in on kids who
need extra help.

That's why I'm in favor of much more college aid, not these
outrageous predatory student loan rates that are charging people I've
met across Pennsylvania, 20, 25, 28 percent interest rates.

Let's make college affordable again. See I think we have to look at
what we're trying to achieve here somewhat differently. We do have a
real gap. We have a gap in achievement. We have a gap in income. But
we don't have a potential gap. I think our job should be to try to
create the conditions that enable people to live up to their god- given
potential. That means health care for everyone, no exceptions. Nobody
left out.

And it means taking a hard look at what we need to do to compete and
win in the global economy. So that's how I prefer to think about it.
Let's affirmatively invest in our young people and make it possible for
them to have a good, middle-class life, in today's much more competitive
economy.

GIBSON: We're running short on time. Let me just give some quick
questions here and let me give you a minute each to answer. What are
going to do about gas prices? It's getting to $4 a gallon. It is killing
truckers. People are in trouble, yet the whole world pays a whole lot
more for gas than we do. What are you going to do about it?

CLINTON: I met with a group of truckers in Harrisburg about a week
and a half ago and here's what I told them. No. 1, we are going to
investigate these gas prices. The federal government has certain tools
that this administration will not use. And the Federal Trade
Commission, and other ways, through the Justice Department.

Because I believe there is market manipulation going on,
particularly among energy traders. We've seen this movie before, in
Enron, and we've got to get to the bottom to make sure we're not being
taken advantage of.

Number two, I would quit putting oil into the strategic petroleum
reserve. And I would release some to help drive down the price
globally. And thirdly, if there is any kind of gas tax moratorium, as
some people are now proposing --

GIBSON: Like John McCain.

CLINTON: Like John McCain and some Democrats, frankly. I think
Senator Menendez and others have said that we may have to do something
because when you get to $4 a gallon gas, people are not going to be able
to afford to drive to work.

And what I would like to see us do is say, if we have that, then we
should have a windfall profits tax on these outrageous profits of the
oil companies, and put that money back into the highway trust funds so
that we don't lose out on repair and construction and rebuilding.

But ultimately Charlie, we've got to have a long-term energy
strategy. We are so much more dependent on foreign oil today than we
were on 9/11. That is a real indictment of our leadership. I've laid
out a comprehensive plan to move us toward energy independence that I
hope I will have the opportunity to implement as president.

GIBSON: Very quickly, Senator Obama, same thing, but we've heard
from politicians for a long time, we're going to end dependence on
foreign oil. I just have a quote, "the generation-long growth and our
dependence of foreign oil will be stopped dead in its tracks right
now." That was Jimmy Carter in 1979. And it's gotten a whole lot worse
since then.

OBAMA: You're right and that's why people are cynical because
decade after decade, we talk about energy policy. We talk about health
care policy. And through Democratic and Republican administrations,
nothing gets done.

I think many of the steps that Senator Clinton outlined are similar
to the plans that we've talked about. It is absolutely true that we've
got to investigate potential price gouging or market manipulation. I
have strongly called for a windfall profits tax that can provide both
consumers relief and also invest in renewable energies.

I think that long-term, we are going to have to raise fuel
efficiency standards on cars because the only way that we're going to be
able to reduce gas prices if we reduce demand. You've still got a
billion people in China and maybe 700 million in India who still want cars.

And so, the long-term trajectory is that we're going to have to get
serious about increasing our fuel efficiency standards and investing in
new technologies. That's something I'm committed to doing. I've talked
about spending $150 billion over 10 years in a Manhattan project to
create the alternative energy strategies that will work, not only for
this generation, but for the next.

STEPHANOPOULOS: We're running out of time for this segment.
Quickly, for each of you, 30 seconds. Senator Clinton, you've said that
you believe in using former presidents. How would you use George W.
Bush if you were president?

CLINTON: I'm going to have to give some serious thought to that. I
do believe that it's a way to unify our country. I thought that
President Bush was right when he asked his father and Bill to represent
us during the aftermath of the tsunami. I thought it sent a great
message here at home and around the world. And I'm sure there will be
opportunities to ask all the former presidents to work on behalf of our
nation. You know, we've got to come together and the former presidents
really exemplify that, whether one agrees with them politically or not.
When they're all together representing our country, that sends a strong
message. And I would look for a way to use all of our former
presidents. But that will take some careful thought on my part.

GIBSON: Senator Obama?

OBAMA: Well, you know, I think that having the advice and counsel
of all former presidents is important. I'm probably more likely to ask
advice of the current president's father than the president himself,
because I think that when you look back at George H.W. Bush's foreign
policy, it was a wise foreign policy.

In how we executed the Gulf War, how we managed the transition out
of the Cold War, I think is an example of how we can get bipartisan
agreement. I don't think the Democrats have a monopoly on good ideas.
I think that there are a lot of thoughtful Republicans out there.

The problem is, we've been locked in a divided politics for so long
that we've stopped listening to each other. And I think that this
president, in particular, has fed those divisions. That's something
that we've tried to end in this campaign. And I think we're being
successful.

GIBSON: All right. We're going to take one more commercial, but
come back with a final question for both of you in just a moment.

(COMMERCIAL BREAK)

GIBSON: Final question now to finish what I think has been a
fascinating debate. And I appreciate both of you being here, thanking
you in advance.

It is hard to see how either one of you win this nomination on the
basis of pledged delegates in primaries, and it could well come down to
super-delegates. And I know you've been talking to them all along.

But let's say you're at the convention in Denver and you're talking
to a group of 20 undecided super-delegates. How are you going to make
the case to them why you're the better candidate and more electable in
November? What do you say to them, minute-and-a-half each?

And by a flip of the coin, Senator Clinton goes first.

CLINTON: Well, I say to them what I've said to voters across
America, that we need a fighter back in the White House. We need
someone who's going to take on the special interests.

And I have a plan to take away $55 billion of the giveaways and the
subsidies that the president and Congress have lavished on the drug
companies, and the oil companies, and the insurance companies, and Wall
Street.

And I have a plan to give that money back, give it back in tax cuts
to the middle class, people who deserve it, who have been struggling
under this president, who feel invisible, who feel like, you know,
they're not even seen anymore.

And we're going to make everybody feel like they're part of the
American family again. And we're going to tackle the problems that have
been waiting for a champion back in the White House.

Now, obviously, I can't do this alone. I can only do it if I get
people who believe in me, and support me, and who look at my track
record and know that, you know, I've spent a lifetime trying to empower
people, trying to fight for them.

And I think it's going to be challenging, but it is absolutely what
we must do in order to keep faith with our country and to give our
children the future that they deserve. So I will tell everyone
who listens that I'm ready to be the commander-in-chief. I've 35
generals and admirals, including two former chairmen of the Joint Chiefs
of Staff, General Wesley Clark and others, who believe that I am the
person to lead us out of Iraq, to take on Al Qaida, to rebuild our military.

And I will turn this economy around. We will get back to shared
prosperity. And we will see, once again, that we can do this the right
way so it's not just a government of the few, by the few, and for the few.

And I need your help. I need the help of the voters here in
Pennsylvania, first and foremost, in order to be able to get to those
conversations. And I hope that I have demonstrated not just over the
last weeks or even over the last hour-and-a-half, but over a lifetime
that you can count on me.

You know where I stand. You know that I will fight for you and
that, together, we're going to take back our country.

GIBSON: Senator Obama?

OBAMA: Well, when we started this campaign 15 months ago, it was
based on a couple of simple principles, number one, that we were in a
defining moment in our history.

Our nation's at war. Our planet's in peril. Our economy is in a
shambles. And, most importantly, the American people have lost trust in
their government, not just Democrats, but independents and Republicans,
who've been disillusioned about promises that have been made, election
after election, decade after decade.

And the bet I was making was a bet on the American people, that they
were tired of a politics that was about tearing each other down, but
wanted a politics that was about lifting the country up, that they
didn't want spin and P.R. out of their elected officials. They wanted
an honest conversation.

And most importantly, I believed that change does not happen from
the top down. It happens from the bottom up. And that's why we decided
we weren't going to take PAC money or money from federal registered
lobbyists, that we were not going to be subject to special interest
influence but, instead, we're going to enlist the American people in the
project of changing this country.

And during the course of these last 15 months, my bets paid off,
because the American people have responded in record numbers. And not
just people who are accustomed to participating, but people who haven't
participated in years. I talked to a woman here in Pennsylvania, 70
years old. She whispered to me, "I've never voted before, but I'm going
to vote in this election."

And so my point to the superdelegates would be that, if we're going
to deliver on health care for every American, improve our schools,
deliver on jobs, then it's going to be absolutely vital we form a new
political coalition in this country. That's what we've been doing
in this campaign, and that's what I'm going to do when I'm president of
the United States of America.